Abera Final Paper 12344

ST.
MARY’S UNIVERSITY
SCHOOL OF GRADUATE STUDIES
ASSESSMENT OF PURCHASING PRACTICE AND ITS

CHALLENGES IN THE CASE OF ETHIOPIAN CONSTRUCTION
WORKS CORPORATION
BY
ABERA URGESA MEGARSA
JUNE 2019
ADDIS ABABA, ETHIOPIA
WORKS CORPORATION
BY
ATHESIS SUBMITTED TO ST. MARY’S UNIVERSITY SCHOOL OF

GRADUATE STUDIES IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS FORTHE DEGREE OF MASTERS OF BUSINES
ADMINSTRATION (MBA) IN GENERAL MANAGEMENT.
JUNE 2019
ADDIS ABABA, ETHIOPIA
ST. MARY’S UNIVERSITY

WORKS CORPORATION
BY
APPROVED BY BOARD OF EXAMINERES
_____________________ _______________________
Dean, Graduate studies Signature
_____________________ _______________________
Advisor Signature
_____________________ _______________________
External Examiner Signature
_____________________ ________________________
Internal Examiner Signature

DECLARATION
I, the undersigned, declare that this thesis is my original work, prepared under the guidance
ofadvisor. All sources of materials used for the thesis have been duly acknowledged. I
further confirm that the thesis has not been submitted either in part or in full to any other
higher learning institution for the purpose of earning any degree.
Abera Urgesa Megarsa ___________________
Name Signature
ST. Mary’s University, Addis Ababa June 2019

ENDORSEMENT
This thesis has been submitted to St. Mary’s University, School of Graduate Studies for
examination with my approval as a university advisor.
________________________ __________________
Advisor Signature
St. Mary’s University, Addis Ababa June 2019
Table of Contents
Table of Contents ........................................................................................................................... i
Acknowledgments ....................................................................................................................... iii
Acronyms and Abbreviations ...................................................................................................... iv
List of Tables ................................................................................................................................ v
List of Figures .............................................................................................................................. vi
Abstract ....................................................................................................................................... vii
CHAPTER ONE ........................................................................................................................... 1
INTRODUCTION ........................................................................................................................ 1
1.1 Background of the study ......................................................................................................... 1
1.2 Statement of the Problems ...................................................................................................... 2
1.3 Research Questions ................................................................................................................. 3
1.4 Objectives of the Study........................................................................................................... 3
1.4.1 The General Objective .................................................................................................... 3
1.4.2 Specific Objectives.......................................................................................................... 3
1.5 Significance of the Study ........................................................................................................ 4
1.6 Scope of the study................................................................................................................... 4
1.7 Limitation of the study............................................................................................................ 4
1.8 Organization of the Study ....................................................................................................... 5
1.9 Definition of Terms and Concepts .......................................................................................... 5
CHAPTER TWO .......................................................................................................................... 6
REVIEW OF RELATED LITERATURE .................................................................................... 6
2.1 Theoretical Review ................................................................................................................. 6
2.2. Principles of Public Procurement ........................................................................................ 14
2.3 Procurement Procedures ....................................................................................................... 16
2.4 Training................................................................................................................................. 19
2.5 Record Keeping .................................................................................................................... 19
2.6 Challenges in Public Procurement ........................................................................................ 20
2.7 Empirical Literature .............................................................................................................. 22
2.8 Conceptual Framework ......................................................................................................... 24
CHAPTER THREE .................................................................................................................... 26
RESEARCH METHODOLOGY ............................................................................................... 26
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3.1 The Research Approach ........................................................................................................ 26
3.2 Research Design ................................................................................................................... 26
3.3Target Population................................................................................................................... 27
3.4 Sample Size and Technique .................................................................................................. 27
3.5 Data Collection Method and Pilot Test ................................................................................ 28
3.6 Sources of Data ..................................................................................................................... 28
3.6.1 Primary Data Sources .................................................................................................... 28
3.6.2 Secondary Data Sources ................................................................................................ 28
3.7 Ethical Consideration............................................................................................................ 29
3.8 Data Analysis and Presentation ............................................................................................ 29
CHAPTER FOUR ...................................................................................................................... 30
DATA ANALYSIS, PRESENTATION AND INTERPRETATION ........................................ 30
4.1 Introduction........................................................................................................................... 30
4.2. Demographics Data ............................................................................................................. 30
4.3 Purchasing Planning ............................................................................................................. 33
4.4 Purchasing Performance Evaluation ..................................................................................... 36
4.5 PurchasingProcedures ........................................................................................................... 38
CHAPTER FIVE ........................................................................................................................ 44
SUMMARY, CONCLUSION AND RECOMMENDATION ................................................... 44
5.1 Introduction........................................................................................................................... 44
5.2 Summary ............................................................................................................................... 44
5.2.1 Purchasing Planning ...................................................................................................... 44
5.2.2 Purchasing Performance................................................................................................ 44
5.2.3 Purchasing Procedures .................................................................................................. 45
5.3 Conclusion ............................................................................................................................ 45
5.4 Recommendation for the Corporation .................................................................................. 46
REFERENCE ............................................................................................................................. 49
APPENDICES ............................................................................................................................ 51
Appendix -A ............................................................................................................................... 51
Appendix -B................................................................................................................................ 55
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Acknowledgments
The completion of this thesis would not have been possible without the cooperation, trust and
support provided by a significant number of people that I wish to recognize. First, I am
permanently indebted to my adviser, Adanech Gedefaw (Asst. Prof), who guided me in the
creation of a problem statement, research design, provided expert advice and was always there
for me when I needed his support.
I would also like to thank all of the individuals that responded to my questioners, without your
support this effort would have ended in failure, thank you.
Special appreciation is also extended to the wonderful procurement and property administration
main department head Ato Atsbeha G/Yohanes and CEO advisor Ato Tilahun Deneke at
ECWC. Finally, I would like to recognize the constant support of my family and who helps me
in any way.
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Acronyms and Abbreviations
ECWC- Ethiopian Construction Works Corporation.

PPA -Public Procurement Agency
CEO- Chief Executive Officer
RFQ -Request for Quotation
RFP -Request for Proposal
TAC -Technical Evaluation Committee
SBD - Standard Bidding Document
5R’s - Right Quality, Right Quantity, Right Time, Right Source andRight Price
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List of Tables
Table 4.1 Response Rate ……………………………………………………………… 28

Table 4.2 Age response Rate …………………………………………………………. 29
Table 4.3 Educational status of respondent …………………………………………… 29
Table 4.4 Work experiences of Respondents …………………………………………. 30
Table 4.5 Position of respondent ……………………………………………………… 30
Table 4.6 Respondents on Sectors ……………………………………………………. 31
Table 4.7 Response summary on purchasing planning ………………………………. 32
Table 4.8 Performance of the corporation in terms of purchasing with the 5R’s ……. 34
Table 4.9 Purchasing procedures ……………………………………………………. 37
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List of Figures
Figure2.1 Conceptual Framework …………………………………………………… 25
vi
Abstract
Purchasing is a means by which an organization acquire good and services in a scientific
manner. In ECWC More than two third of the organization annual budget is spend through
Purchasing. Every activity of the corporation is highly attached with the performance of
procurement and property administration. Thus, failure of the purchasing activity has a direct
impact on the failure of all other sectors performance. This study focused on the assessment of
purchasing practice and its challenges in the case of ECWC. The purpose of the study was to
assess the performance of procurement main department, the satisfaction level of the end users
and the challenges that affect the practice of purchasing. For the accomplishment of this, the
study was employed through descriptive designee in which the selection of respondents is
carried out by using simple random sampling technique. 89 respondents are considered as a
sample unit. Both primary and secondary data are used. For primary data, both structured and
unstructured type questionnaires were prepared.The performance of the purchasing activity is
poor. The workflow is too long and has bureaucratic nature which is not flexible for generation
of new idea. The section or the department that is very responsible for the performance of
procurement is not fully authorized to make decision in every purchasing stage and method.
Besides, the qualification of the staff and training held is not well enough to fill the gap. The
negotiation, specification and contract management are also too poor.However, some of the
observed gaps should be filled. This needs commitment from leaders of the corporation to
improve the purchasing practice and resolve challenges for sound purchasing performance.
Key words: Purchasing,procurement, right quality, right quantity, right price, right time, right
source.
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CHAPTER ONE
INTRODUCTION
1.1 Background of the study
Purchasing is one of the major activities of all organization to function and run. Purchasing
function covers the sourcing end of supply chain management interfacing with the delivery end of
the suppliers, while the classical definition of purchasing is ‘to obtain materials and/or services of
the right quality in the right quantity from the right source, deliver them to the right place at the
right price. (Alijan, 1973:1-3).
Traditional research on purchasing practices was concerned with identifying the best selection
ways of suppliers based on supply characteristics (Kraljic, 1983). This research helped shifting the
focus of purchasing from supply management to supplier management. Bensaou, (1999) further
recognized that the key role of purchasing lies in managing relationships, not only between buyers
and suppliers but also in the wider supply chain network. Based on these contributions, marketing
and supply chain scholars have examined developments in purchasing with reference to
relationship management and supply chain networks respectively. With respect to measurement of
purchasing performance, a recently developed framework helps us to a better awareness of how
organizations relate to their supply markets (Lind green, Van Raaij, Vanhamme, and Johnston,
2013).
The standard statement of the overall objectives of the purchasing function is that it should obtain
the right materials in the right quantity, for delivery at the right time and place from the right
sources the right service (after and before sale) and the right price.
Efficiency procurements procedures has become one of the crucial factor for determining
organization efficiency as inefficiently procurement procedures not only reducing organization
profit margins but also impact on overall success of organizations. In this aspect procurement is
considered to be of major strategic importance for organization successfulness. (Paul raj et al.
2006).
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The Ethiopian Construction Works Corporations (ECWC) is one of the Public enterprise currently
engaged in domestic and overseas construction, upgrading and maintenance of roads, bridges,
works relating to dams, irrigations, hydropower generation, water supply systems sewerage
systems drainage, deep water wells, reclamations, river diversions, construction of buildings, air
fields, rail ways ports and other civil works. The corporation procurement unit is organized under
the Corporate Resource Management and Support Service sector to supply the requested goods or
service to the user department. Well designed procurement system allows the procurement unit to
acquire the goods or servicesat the right time, price, source, quality and quantity. The user
department will also step forward their activity for the achievement of the organizational goal
without any interruption as they are acquiring the requested goods or services. Thus, in this study
the researcher tires to assess the purchasing practice and its challenges at the ECWC.
1.2 Statement of the Problems
Public procurement systems are very weak and ineffective governance of the public sector is at the
center of strong challenges (Thai, 2009). Moreover, in developing country, many procurement
activities still suffer from neglect, lack of proper direction, poor coordination, slow with a number
of bureaucracy, lack of open competition and transparency, lack of accessibility, differing levels of
corruption and not having a cadre of trained and qualified procurement officer, who are capable to
conduct and manage the procurement process in a professional, timely and cost effective manner
(Wanyonyi, 2015). Mamiro, (2010), described on findings that one of the major setbacks in public
procurement is poor procurement planning and management of the procurement process which
include needs that are not well identified and estimated, unrealistic budgets and inadequacy of
skills of procurement staff.
In Ethiopia, most project works are being affected due to the lack of effective procurement
process, which is the main cause of insufficient service delivery in all public sectors (Anteneh,
2015).
According to Leenders et al. (1989), the essential steps in procurement procedure are; Recognition
of need, Accurate description of desired commodity, Selection of possible source of supply,
Analysis of bids, Preparation of the purchase order, Follow-up and expediting, Receipt and
inspection of goods, Clearing the invoices and Payment and finally maintenance of records.
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When the current practice of ECWC as compared with the above steps seems variation or lacks
some of the steps. This basically explains the procurement steps followed in the corporation
arelacks accurate description of desired commodity on time and Clearing the invoices and
Payment takes longer period of time. This is the cause for supplier dissatisfaction (ECWC
manuals)
ECWC is a public sector which is not free from the above-mentioned purchasing delaying
problems or factors. The current Purchasing process of ECWC has been conducted by using the
legal document of the corporation procurement manual and public procurement agency (PPA)
directives. Many or almost all of the user sectors, departments or divisions raises or complain that
they are not satisfied by the purchasing practice of the corporation, this is mainly because of the
delay in delivery of good and services.The purchasing/procurement steps followed in the
corporation are too long and inflexible, incomplete purchasing plan, lack of budget, lack of
accurate description of desired goods or services on time are the problem. Since the corporation
has undertaking different types of road, dam and building projects in different parts of the country,
lack of efficient delivery of goods and services resulted in cost and schedule overrun of the
corporation in general and the projects in particular and creates dissatisfaction from the clients.
The above elaborated paragraph explains the statement of the problem that this study tries to
assess.
1.3 Research Questions

The research questions are stipulated as below: -
1. Does ECWC follow the purchasing manuals at all stages of buying process?
2. What are the problems that hinder efficient purchasing practices in ECWC?
1.4 Objectives of the Study
1.4.1 The General Objective
The general objective of this study is to assess the purchasing practice and its challenges in the
case of Ethiopian Construction Works Corporation with specific focus to head office.
1.4.2 Specific Objectives

The specific objectives of these studies are: -
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i. To evaluate whether ECWCfollows all stages of buying process.
ii. Toidentify the challenges of ECWC, when they buy various goods or services.
iii. To suggest the scholarly recommendations to overcome the problems.
1.5 Significance of the Study
This study identified the reasons behind ECWC inefficient purchasing practices and the
implications on accomplishment of project and district plan, although total mission of the
corporation. It conducted a study which assesses the purchasing process and the related
challenges providing the necessary information and direction to improve the existing purchasing
practice. Moreover, the purpose of the research is expecting put into insight the effects of
purchasing practice in the organization, furthermore through attaining the intending purpose the
research anticipate the following benefit. First, to add the current existing knowledge in
purchasing this contributes to the main department in developing knowledge regarding the effects
of purchasing practice in the organizations. The findings of the study also will assist other
organizations to utilize the best practices as suggested throughout this study. To ensure work
improvements and lead to better utilization of resources in regard to improving processes for
procurement and general organization performance. And finally, the findings shall provide useful
information's in regard to policy makers for the same in view of taking necessary action address
challenges facing procurement practitioners so as to bring about an easily implementable
suggestions in this focused area of the study.
1.6 Scope of the study
The focus of this study was limited to the purchasing practice and its challenges in ECWC at head
office Addis Ababa. Specifically, on the assessment of purchasing practice and its challenges such
as purchasing procedures, purchasing plan and purchasing performance.The target population for
this study was limited to the Deputy CEOs, Main departments, Departments and team leaders’
1.7 Limitation of the study
Although because of the budget constraint and inconsistency in a response as they would not
finish all the questions in the required time. The results of the study cannot be fully accepted as
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being completely relevant and applicable to all at project and district level. However, some degree
of generalization might be addressed possible. ECWC procure different goods and services in bulk
centrally and distributed to different sectors, projects and district.
1.8 Organization of the Study
This study has been organized in five chapters. Chapter one entail introduction, background of
study, statement of problem, objectives of study, research questions, significant of the study, scope
and Limitation of the study and Organization of the study. Chapter two covers literature review,
chapter three covers research design and methodology; meanwhile chapter four is foresee to cover
data analysis, presentation and interpretation. Chapter five is specifically for summary of the
findings, discussions, conclusions and recommendations.
1.9 Definition of Terms and Concepts
Right Price: - purchased item with reasonable costing

Right Quantity: - purchasing of goods or items without less or more quantity delivery
Right Time: - Deliver the purchased item at the right time
Right Quality: - purchased item with the desired specification
Right Source: -purchase items from right supplier who has equal quality for money value
Efficiently: -The best procurement is simple and swift, producing positive results without
protracted delays (Thai: 2009)
Bid: -means a method in the procurement process extending from advertisement of or invitation to
bid up to Signing of contract.
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CHAPTER TWO
REVIEW OF RELATED LITERATURE
In this chapter, the researcher has reviewed relevant literatures which are in related with the title in
the study area. The chapter includes concepts and ideas, practices of purchasing and organizational
performance. Conceptual framework of the research and empirical evidences are also included.
The efficiency and effectiveness of an organization based on the management and giving due
consideration for every function of the firm in particular the function dealing with
purchasing/procurement and supply system has paramount importance. Most organizations have
spent a sizeable amount of their budget for purchasing goods and service. Due to this fact,
purchasing is common activity in all types of business enterprise. It is imperative that these
purchases are made following a uniform, systematic, efficient and cost-effective procedure, in
accordance with existing documents of the organization.
2.1 Theoretical Review
2.1.1. Definitions of Terms
It is common to see people confusing the terms purchasing and procurement. On the other hand,
some use terms like acquisition, public contract and supply management equivalently to
procurement. According to (Dobler and Burt), purchasing comprises the essential activities
associated with the acquisition of the materials, services and equipment used in the operation of an
organization. Public procurement, on the other hand, comprises a wider range of supply activities
than those included in the purchasing function. It typically includes a broadened view of the
traditional buying role, with more buyer participation in related material services (Dobler and
Burt: 1998). The terms purchasing and procurement are used interchangeable and also referring as
material management, logistic, etc. It may therefore be helpful to start by clarifying some of these
terms and concept.
I. Purchasing: - Defined as the activity responsible for getting the right material to the right place,
at the right time, in the right quantity, at the right price (Herel, Encyclopedia: 994). The process by
which an individual, a company (or other organization) contracts with third parties to obtain the
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goods and services required to fulfill its business objectives in the most timely and cost-effective
manner (Timothy: 2001).
II. Procurement: - According to Dobler and Burt (1998) procurement can be defined as “…the
acquisition, whether under formal contract or other wise of goods, services and works from third
parties by contracting authority. “According to the Ethiopian Public Procurement Proclamation
(No 649/2009),procurement means “obtaining goods, works, consultancy or other services through
purchasing, hiring or obtaining by any other contractual means.
III.Right quality: - Quality is defined as simply 'fitness for purpose' or the British standard
institution defines "the totality of features and characteristics of a production or service that bear
on its ability to satisfy a given need" (Nair, 1990).
In meeting, this objective purchasing must select items, which have sufficiently quality to fit
users’ requirements and specifications. The term quality as used in the field of purchasing carries
quite a different meaning than the meaning that we usually associated with this word.
In common usage, it refers to the excellent features of the subject, "The right quality is the suitable
of an item for a given purpose" (Nair, 1990).
IV. Right quantity: - The right quantity is more relevant to the purchase of consumables or parts or
assemblies for manufacturing than for project buying. Fulfilling these objectives will enable to
provide a continuous and uninterrupted material at the minimum cost. In most organization the
decision of how much to purchase is more important by the close relationship of purchases
quantity and schedule use (Parson, 1982).
The decision of how much to acquire follows clarification of what is acquired. Therefore, before
making decision considering factors that complicate that quantity decisions are essential,
including:
• The larger the quantity is the lower the unit price.
• The larger the quantity the higher the storage costs
• The larger the quantity is the higher the risk of damage.
• The larger the quantity the higher the cost of items in storage
• The larger the quantity the fewer orders that will be place and hence the lower the ordering
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cost.
V. Right price: - A traditional purchasing objective is to obtain the lowest possible purchase price.
However, the common practice is to obtain the best life cycle price or the lowest total acquisition
cost. "The factor that affect the price of items are quality and quantity required, urgency of
requirements, demand and supply of materials in the market, whether there is room for
competition or not, whether the past business relationship was good or not' strained " (Parson,
1982).
VI. Right time: - The delivery of the contracted item to the right place at the right time is an
important procurement function. Proper buying enhances production schedules without loading
warehouse with excessive inventory and also minimizes the unfavorable effects of price changes.
In case of regularly used or procuring' items, right time may mean the time when the stock reaches
the minimum level adhering the responsibility shared both by the purchasing unit, and the
approving body.
VII. Right supplier: - The right source is fundamental component or the major purchasing
objectives. Basic information about the number and location of potential suppliers, the nature of
products, prices charged and forecasts of the economic condition can be acquired if we are to
analyze the supply market effectively rather than simply buy from traditional sources which may
not be competitive
VIII. Supply chain Management: - According to Stephen Lemay, David J. Bloomberg, and Joe B.
Hanna, SCM is: “The process of planning, organizing, and controlling the flow of materials and
services from suppliers to end users/customers. This integrated approach incorporates suppliers,
supply management, integrated logistics, and operation (manufacturing system) (Stephen, David
and Hanna 2002) .
The survival of any business today is no longer solely dependent on its own ability to compete but
rather on the ability to cooperate within the supply chain system. Supply chain management is a
major concept for today’s rapidly growing business organizations. The term supply chain is
basically a group of independent organizations connected together through the products and
services that they separately and/or jointly add value on in order to deliver them to the end
consumer (Dawei L, 20011: 9). The seemingly independent relation between the organization and
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organizations within the supply chain becomes ever more interdependent. Generally the supply
chain management in any organization is influenced by strategic challenges that have long term or
overall impact on the architecture and management of the supply chain varying from time to time.
Business dimensions in market, technology, resource and time are the major challenges of supply
chain.
When you manage a supply chain, you coordinate supply management, operations and integrated
logistics into a flawless Pipeline to maintain continual flow of products or services to include all
firms and sectors involved, from the raw materials source to the final product and delivery.
2.1.2 Public Procurement
Public procurement is the process of the acquisition, usually by means of a contractual

arrangement after public competition, of goods, services, works and other supplies by the public
entity. The public procurement process spans the whole life cycle from initial conception and
definition of the needs through to the end of the useful life of an asset or the end of a contract. The
Federal Democratic Republic of Ethiopia, Public Procurement and Property Administration
Agency (2011, PP: 6). Public procurement is a process, which the governmental entity hiring or
purchasing works, goods and services from other parties (Michael and Juanita, 2006).
2.1.3 Procurement Methods
The Federal Democratic Republic of Ethiopia, Public Procurement and Property Administration
Agency (2011, PP: 47) by quoting Proclamation Article 33: list the following methods of
procurement. The following methods of procurement shall be used in public procurement:
I. Bidding (tendering)
II. Request for Quotations
III. Request for Proposals
IV. Restricted Bidding and
V. Direct Procurement
The Federal Negarit Gazeta (2005, pp 2963) sates that except as otherwise provided in this
Proclamation, the procuring entity shall use open bidding method as the preferred procedure of
procurement. Even though it is common that each method has its own advantage and drawback,
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the Ethiopian government prefers the bidding method of purchasing especially; open bidding way
to perceive the advantage gained by such method.
The Ethiopian Construction Works Corporation has a procurement directive that describes detail
direction for the practice of procurement in head office, in all projects and district. There are
different methods of purchasing applied to different situations where list of requirements are to be
met.
The major methods of procurement derived from on the bases of Federal Public Procurement and
Property Administration Agency used in the ECWC are as follows: -
1. Open Tender /bidding/ 6. Restricted bid
2. Request for proposal 7. Two Stage bid
3. Request for quotation / Proforma / 8. Direct purchase /single source supplier/
4. Reverse auction 9. Pre-qualification Tender and
5. Fixed price procurement
The selection criteria and detail description of each method of the purchasing process is stated as
follows; -
2.1.3.1Open Tender/ Bidding
According to Lysons and Farrington ( 2006, PP: 576) a purchasing procedure whereby potential
suppliers are invited to make a firm and unequivocal offer of the price and terms on which they
will supply specified goods or services, which, on acceptance, shall be the basis of a subsequent
contract.
Types of bid
According to Lysons and Farrington (2006, PP: 576) tender are alienated in to five ways:
Open Tender: Prospective supplier are invited to compete for a contract advertised in the press or
on the internet-the lowest tender generally being accepted, although the advertisers usually state
that they are not bound to accept the lowest or any tender. Similarly, the Federal Democratic
Republic of Ethiopia, Public Procurement and Property Administration Agency (2011, PP: 41)
sates that all interested firms bidders are given adequate notification of contract requirements and
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all eligible bidders are given an equal opportunity to submit a tender. The public body must give
sufficient public notification of bidding opportunities to potential bidders to determine their
interest and prepare bid documents.
Selective Tender: Tenders invited from supplier on an approved list that have been previously
vetted regarding their competence and financial standing.
Serial Tenders: Prospective suppliers are requested on either an open or a selective basis tender for
an initial scheme on the basis that, subject to satisfactory performance and unforeseen financial
contingencies, a program of work will be given to the successful contractor, the rates and prices
for the first job being the basis for the rest program.
Negotiated tender: a tender is negotiated with only one supplier so that competition is eliminated.
This type of contract is usual. In case of local authority, it would require the waiving of standard
order.
Thus, generally from the above method of tendering the Ethiopian government and ECWC adopt
only the two methods of tendering; open and restricted Tendering.
2.1.3.2Two Stage Biding
According to public body may use Two-Stage Bidding Method for the procurement of large or
complex contracts. In the First Stage, a public body shall invite through advertisement unpriced
technical proposals on the basis of Bidding Documents which shall state the requirements of the
public body in general terms and incorporate the necessary description and questionnaires and
outline a conceptual design and/or specific performance requirements. A conceptual design would
focus mainly upon the presentation of a functional design that provides potential bidders with
basic technical information, e.g. stipulated performance specifications, outline technical
specifications, visual, operational and economic details of the required procurement object.
2.1.3.3Request for Quotation
Agency (2011, PP: 73) a public body may undertake procurement by means of a Request for
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Quotations (RFQ) for the purchase of readily available, standard, off-the-shelf goods and related
services and low value simple works or physical services.
The ECWC shall request quotations from many Bidders as practicable and shall obtain and
compare at least three (3) quotations to establish the competitiveness of the quoted prices.
Comparison of two (2) quotations is justified only when there is satisfactory evidence and
suppliers put stamp of the company on purchase request considered as out of stock and also the
price that the bidder quoted is market price.
A Public Body may carryout procurement by means of request for quotation with the authorization
of the head of the Public Body or his representative without having to obtain the approval of the
procurement endorsing committee if the value of such procurement falls within the threshold set
forth below for each type of procurement:
1. For works, …………………………….. birr 250,000.00
2. For goods…............................................. birr 100,000.00
3. For consultancy, ……………………..…..birr 60,000.00
4. For services ...............................................birr 75,000.00
According to the ECWC procurement manual (004/2009, P: 24) the threshold amount to procure
under request quotations method is:
1. For works, …………………………….. birr 50 million
2. For goods, ……………………………. birr 10 million
3. For consultancy, ……………………..…..birr 10 million
4. For services, …………………………..…birr 10 million
2.1.3.4 Request for Proposal
Agency (2011, PP: 79) A Request for Proposals (RFP) shall be used by public bodies for
procurement of consultancy services. Consultancy services mean a service of an intellectual and
advisory nature provided by consultants using their professional skills to study, design, and
organize specific projects, advice clients, conduct training and transfer knowledge.
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2.1.3.5 Restricted Bidding
Prospective suppliers are invited to compete for a contract that advertising of which are restricted
to appropriate technical journals or local newspapers. Likewise, the Federal Democratic Republic
of Ethiopia, Public Procurement and Property Administration Agency (2011, PP: 43) the total
contract value of Procurement made by restricted bidding, in accordance with Article 49.2 of the
Proclamation shall not exceed the following:
1. for procurement of works Birr 2,000,000.00
2. for procurement of goods Birr 500,000.00
3. for procurement of consultancy services Birr 300,000.00
4. for procurement of services Birr 400,000.00.
But according to the ECWC procurement manual (004/2009, P: 22) the threshold amount to
procure under Restricted bidding is:
1. For procurement of works Birr 200 million.
2. For procurement of goods Birr 150 million.
3. For procurement of consultancy services Birr 20 million.
4. For procurement of services Birr 25 million.
2.1.3.6 Direct Procurement
The public body shall, in the first place, ask for a quotation from a single bidder directly and
afterwards shall be free to negotiate with the selected sole bidder. There is no requirement for
Direct Procurement to be advertised, nor is there a need for a bid security. According to (Benton
2007, pp 150-151) the major arguments in favor of single sourcing are that with the certainty of
large volumes the supplier can enjoy lower costs per unit and increased cooperation and
communication to produce win-win relationship between the buyer and seller.
Then again, Fearon and England (,1992 pp 257) discussed how the purchasing unit relay with a
single source by enumerating
1. Prior commitment, a successful past relationship, or an ongoing long-term contract with a
preferred vendor might prevent even the possibility of splitting the order.
2. The supplier may be the exclusive owner of certain essential patent or process and, therefore be
the only possible source.
13
3. Concentrating purchase may make possible certain discounts or lower freight rates that could
not be had otherwise.
4. When all orders are placed with one supplier, deliveries may be more easily scheduled.
5. Effective supplier management may require considerable resources and time.
For the reverse auction, fixed price and Pre-qualification method of tender the corporation does
not adopted or exercised frequently.
2.2. Principles of Public Procurement
There are a number of principles described under public procurement that can be shared or
exercised commonly. These principles are implemented through various means of legal and
regulatory rules on conducting public procurement procedures. According to (Arrow, S. 2010)
there is eight Objectives (Principles) to be meet in Public Procurement.
2.2.1 Acquisition Efficiency /Value for Money/
All procurement system is to successfully require the goods, works or services concerned on the
best possible terms. This is often referred to as value for money or efficiency or economic
efficiency. Obtaining value for money in requiring the goods, works or services needed to carry
out the government’s‟ activities. This objective can be seen to in have three aspects. -
 Ensuring the goods, works or services acquired are suitable.

 Concluding an arrangement to score what is needed on the best possible terms and
 Ensuring contractor ability to provide on the agreed terms. It has often been said that this is
the primary goal of most procurement systems.
2.2.2 Integrity /Avoiding Corruption and Conflict of Interest/
Integrity refers to the idea that procurement should be carried out without any influence of
corruption. This occurs in various forms of collusion between government and bidders; among
them; awarding contracts:
 On the basis of bribes

 To firms in which one has a payroll interest and relationship,
14
 To political supporters the government will not obtain the benefit of the most competitive
offer that would be put forward a fair competition. Here the government should integrate
this corruption in doing so with fair competition and transparent system of procurement
(Arrow, S. 2010).
2.2.3 Accountability
The third objective is to ensure accountability in the sense that the system provides means for
interested parties to establish whether the government is meeting its objectives. It’s or means to
achieve many of the objectives of a procurement system, including value for money and integrity.
Its OC separated objective of the procurement system governments may accept costs to
accountability mechanisms, even if these accountability mechanisms do not produce (Arrow, S.
2010).
2.2.4 Equal Opportunities and Treatment of Supplies
It’s important to realize that the concept of equal treatment in the public procurement may take on
two different roles. The first is equal treatment which may serve simply as a means to achieve
other objectives of the public procurement system, such as value for money in obtaining goods,
works and services, preventing corruption and opening up markets to competition. Secondly,
however, in addition to serving a means to support other procurement objectives, equal treatment
may also serve as an objective of the procurement process in its own right (Arrow, S. 2010).
2.2.5 Fair Treatment of Supplies
It allows supplier to put its case before being debarred or excluded from procurement can improve
the quality of debarment decisions and perhaps thus avoid unjustified debarment of a firm that
could provide the best value for money; whilst requiring that supplies are to be given reasons for
decisions against them can help improve both the quality of decisions and supplier monitoring of
the procurement process (Arrow, S. 2010).
15
2.3 Procurement Procedures
Shaw (2010) points out that the procurement process can be wrapped into three steps. These are
need identification, planning and specification of goods or services required, and sourcing,
awarding, and supplier management to facilitate timely delivery.
2.3.1 Need Identification
Procurement is done to desire to accomplish a specific task. Given that resources are always
scarce, the task to be accomplished should be important to an organization (Nakamura, 2004)
2.3.2 Planning and Specification of Goods or Services Required
Once the needs have been identified, the procurement department should develop or communicate
a plan on how to deliver the service or goods required. The plan must be developed in
collaboration with the other functions within the organization, so that it is integrated into the
organization’s strategy and therefore provided for adequately (Shaw, 2010). To be able to
purchase the right goods or services, the specifications of what the organization needs must be
clear. These specifications are used to communicate to the supplier what is needed and what
should be supplied. It is therefore important to have clear, precise and accurate specifications.
Most organizations have standard specifications for the most regularly procured items and services
such as medical and construction (Shaw, 2010. Thai, Araujo, Carter and Callender
2005) provide that a specification is a detailed description of the design, the service, or materials.
It describes in detail the requirements to which the supplies or services must conform. The basic
requirement of a good specification is to clearly identify the service or product to stakeholders.
The specifications must be clear to all parties. That is the user, procurement and the supplier.
Factors to consider in specifying a product include physical attributes, technical specification, and
intended use (Thai et al, 2005).
2.3.3 Sourcing, Awarding and Supplier Management
Hinson and McCue (2004) say that sourcing is the process of identifying sources of supply that
can meet the organization’s immediate and future requirements for goods and services. The
sourcing process adopted will depend on the situation and on the time available to carry out
16
sourcing. For instance, in a sudden on-set emergency the need to respond quickly to the
emergency will mean there will be limited time to gather sourcing information and approve
suppliers; therefore, an organization may make use of existing suppliers.
Steps in the Sourcing Process
I. Market Enquiry: - the process of inviting and evaluating tenders or quotations will vary
depending upon an organization’s own internal procedures.
II. Evaluation and Awarding: - The evaluation of tenders and awarding of contracts to
suppliers is an important phase of the procurement process (Maurer, 2004). It is the
process that determines the actual quality, reliability, delivery, etc. of the goods and
services.
The procurement department coordinates the following

 Analyzing and evaluating the bids against set criteria, specification requirements and
presenting the analysis to an procurement appointed committee
 Verification of supplier capability and quality control/ assurance processes
 Reviewing product inspection results where necessary
 Verification of technical evaluation reports where applicable
 Negotiates with vendors where it is recommended by the committee
 Placing orders and expediting the delivery.
2.3.4 Placing Orders and Contracting
After evaluating and awarding of tender, the next step in the process involves placing orders for
the goods or services with the supplier or establishing contracts which need to be sent to suppliers.
In emergency situations the approval levels and limits are adjusted, based on an approved process,
to speed up the process of acquiring goods and services. Under normal circumstances, the
approval processes may be more elaborate. The orders establish contractual relationships between
the organization and the supplier (Shaw, 2010)
17
2.3.5 Progressing /Expediting
Once the order is placed and the supplier has confirmed receipt and agreed to the contract terms
and conditions, the role and the amount of work that staff in procurement have to undertake will
be affected by the performance of the suppliers (Bovis, 2007). It is necessary therefore, for the
procurement staff to monitor the progress of orders and the performance of the suppliers. The
continuous monitoring enables the organization to pick out break-down points in the system and
quickly identify solutions (Shaw, 2010).
2.3.6 Delivery and Return
Lewis and Roehrich (2009) argue that procurement only facilitates delivery through expediting for
timely delivery and trouble-shooting returns. The physical receipt and inspection of goods takes
place at the delivery point. In addition, whoever is responsible for accepting delivery and
inspecting the goods should understand the procedure to follow in the event that there are any
problems or discrepancies. For certain goods or commodities an independent inspection company
may be used to check the quality of the goods (Shaw, 2010).
2.3.7 Payment
When goods or services are received and accepted into stock, procurement then facilitates
payment of the supplier by providing necessary documentation to Finance Department. Orders are
normally generated in procurement, as the goods are delivered in the warehouses and transported
to final distribution points; additional documents are generated in the process to support
transactions. All these documents are finally consolidated to support vendor payments (Shaw,
2010).
2.3.8 Records of Procurement Documents
According to the proclamation (2009), public bodies shall have to maintain records and documents
regarding their public procurement, the record shall include that following: -
 A brief description of the procurement;

 The invitation to bid;
 The name and addresses of suppliers that submitted bids;
18
 The evaluation criteria stipulated and a summary of the evaluation and comparison of bids;
 Information on the proceeding of any decision rendered where a complaint against a
procurement process is lodged;
 The ground for using a procurement procedure other than open bidding;
2.4 Training
Training in Procurement improves and imparts knowledge and required skills to staff performance
also enable the staff to be prepared for future challenges such as changes in legislatives,
regulations as well as technological in procurement industry. Furthermore, through training
concerned staff grows in their career and expertise.
Trained employees normally make the best use of available resources and enable working with
confidence with minimum supervision from their superior’s. Skilled staffs are the most important
and valuable assets of any organization, in view that without skillful workforce any technology or
practice is absolutely not bring any positive result in organization due to deficiency of technical
know-how. As business became competitive better trainings apart from enhancing organization
performance shall also enable organization win competition from opponents on the same industry,
good trained staff enable organization gain competitive advantage.
Unfortunately, the majority of governmental, private organization and international organizations

are not recognizing the importance of training to increase their employee's productivity and when
the economy slows or when profits decline, many organizations first seek to cuts in their training
budgets (McGill, 2007). In regard to procurement related functions a person or an office/team
whom are not conversant with required regulation will have a negative contribution to
organization growth as procurement industry is among of fast changing professionalism hence
acquiring of new skills is paramount for better performance.
2.5 Record Keeping
Record keeping is one of crucial elements in facilitating efficiency procurement functions. This
function can be performed either traditional means (paperwork-based applications) or
electronically in view of analyzing the previous decision made for awarding, performance or
19
termination of underperforming tender. Through record keeping the lesson learned, good practices
as well as mistakes done in the past can be analyzed for future and continual improvements;
learning process is a continual endeavor so as record keeping for procurement. In 2016 the finding
of internal audit report shows that poorly record keeping for procurement of different materials in
the organization.
2.6 Challenges in Public Procurement
Krol (2012) indicated that the current economic crisis puts pressure on governments to cut
spending and reduce deficits. With public procurement often accounting for 10-15 percent of a
country’s GDP and for up to 65 percent of public sector budgets, governments are faced with the
challenge to keep adding maximum value while at the same time rigorously reduce their spending.
This implies that many government organizations need to shift from a budget driven to a value
driven way of thinking and acting, but this also means that there is an important role for the
procurement function to fulfill. The public procurement function, however, is faced with a number
of challenges such as:
 Procurement is organized around contracts rather than commodities. There are peak
moments when contracts are about to expire, but there is no continuous process to manage
internal and supply market developments and opportunities.
 Procurement does not feel it is responsible for the operational procurement processes; there
is no focus on managing the end-to-end process and closing the procurement loop.
 The fear for negative publicity has led to a growing emphasis on the legal aspects of the
tendering process.
 Procurement acts in a reactive way and is often not involved until the specifications have
been defined.
 Procurement is seen as an operational department and not perceived as an advisor or
partner of the business.
According to Thai (2001), there are also external factors public procurement practitioners have
always faced challenges imposed upon by a variety of environment factors including market, legal
environment, political environment, organizational environment, and socio-economic and other
environmental factors.
20
Market factor: Market conditions have a great influence on public procurement practitioners’
effort to maximize competition. Moreover, the market determines whether or not socio-economic
Objectives of procurement are accomplished, whether or not a governmental entity can fulfill its
needs; the timeliness of fulfillment; and the quality and costs of purchased goods, services and
capital assets. As there are different levels of economic growth among countries in the world,
market conditions are very favorable in industrialized countries, while they may be unfavorable in
developing countries
Political environment: In a democracy many individuals, groups, and organizations in the private
sector including trade associations, professional associations, and business firms or companies
(commonly known as interest groups) are actively involved in all aspects of the public
procurement system. Having various interests, objectives and beliefs, interest groups are involved
in the public procurement system in several ways such as lobbying legislative bodies to pass or
alter procurement statutes, influencing implementation of these statutes, and influencing budget
authorization and appropriations processes. Normally, a government program that is eventually
adopted is a compromise among different views of interest groups, policy makers and
management. In this democratic environment, there are cases of a strong coalition of policy
makers, bureaucrats and interest groups in their effort to get their programs adopted. Social,
economic and other environmental force: While some countries impose social policies on their
public procurement practices (such as a policy placing a fair proportion of government
acquisitions with woman/minority-owned small business, or economically disadvantaged areas),
most governmental entities -be it a developed or developing country or federal, state, and local
governments- use their large procurement outlays for economic stabilization or development
purposes by preferring national or local firms over firms from other countries or other geographic
locations. Public procurement practitioners may be in a favorable economic environment or
market (with many competing tenderers in their country or local areas) or an unfavorable
economic environment (where competition hardly exists). This environment would have a great
impact on their practices as they may face an imperfect competitive market.
Organizational structure: Organizational structure may be very simple or very complicated,

depending on the size of government organization. Most state and large local governments have
procurement divisions either within their finance or administrative services departments; and very
21
few departments, except perhaps transportation or public works departments, have a procurement
function or officer.
2.7 Empirical Literature
This part presents the assessment of research papers written in purchasing area. The papers were
selected below are because of their similarity with the study in the assessment of the purchasing
practices and its challenges of organization. The researchers tried to find out the gaps which exist
in the purchasing process that hinders the effectiveness of its procedures with the common
objective of examining the steps involved in the purchasing process and make feasible
recommendations and improve the purchasing practice and procedure.
2. 7.1 Purchasing Practice Problems in Addis Modjo Edible Oil Factory

(Tewodros, 2006)
A senior essay prepared by Tewodros Walelgne and presented to Addis Ababa University College
of Commerce procurement and Supplies management department.
The paper presents a list of problems which badly influence the company's purchasing
performance. The major challenges are continuous price fluctuations in the supply market,
shortage of raw materials, poor quality purchases, delayed purchases and unreliable suppliers. To
address the above stated problems the researcher developed research objectives, which are
analyzing the effects of purchasing on organizational performance and its process and learn about
source of supply. The research findings shows that the absence of permanent suppliers is related to
unreliable source of supply, which is bringing poor quality purchases, the existence of weak
relationship between purchasing and other departments together with unskilled purchasing staff is
delaying the purchasing process, the least price selection criteria the company is currently using
are bringing poor quality materials. Based on the analysis made the paper recommends solutions
assumed to improve the challenges. The researcher proposes further research on the area to come
up with viable solutions. Besides this, employing skilled manpower, and establishing permanent
source of supply are recommended.
22
2.7.2 Evaluating the Purchasing Procedure in Ethiopian Grain Trade
Enterprise (Biruk, 2006)
The second senior essay presented by Biruk Assefa and presented to Addis Ababa University
college of Commerce procurement and supplies management department.
The paper discusses the problems hindering the efficient purchasing practice in the organization.
The main problems in the enterprise were poor quality of grain purchases because of suppliers
deceiving purchasers, continuous price fluctuations, unclear purchasing procedures and
incompetent purchasing staff. The paper presents a general research objective analyzing the
purchasing procedures and understanding the relationship between purchasing and other units of
the organization. The research findings show that the poor quality of grain is attributable to the
fact that no technical specifications are given to purchasers and disloyal act of suppliers. The paper
discusses unreliable suppliers are causes of inefficient purchasing since the enterprise has no
permanent source of supply. Further the problem of unclear purchasing procedure is mentioned as
a research finding. Thus developing a clear purchasing procedure is recommended for speedy
purchasing process. Also, development of specification for purchases and training the purchasers
on the application of specification is recommended. Although the problem of unreliable and
disloyal suppliers is presented as the critical problem possible ways of solving this problem are not
suggested.
2.7.3 Purchasing Management in Commercial Printing Enterprise (Getachew,

2006)
The third research paper prepared by Getachew Zeleke and presented to Addis Ababa University
College of Commerce purchasing department.
The discussion of the research problems states the occurrence of poor quality and delayed
purchases critical hindrances on the effective purchasing performance. Further the minimum
attention given by management for the function expedites the problem. The research objectives
include analyzing the purchasing procedure, exploring management support and organizational
23
structure and identifying the effects of organizational structure on purchasing performance.
Additionally, learning how purchases are being accelerated and finding out about the purchasing
plan of the organization are mentioned as research objectives. The paper details a number of
findings, which explain the reason behind the critical problems. This includes that there is no
sound and strong relationship with suppliers, purchases are not properly planned, implemented
and expedited, the absence of clear specification of items. Feasible recommendations were given
by the researchers to improve the purchasing performance. Consequently, the need for improved
and strong relationship with suppliers is suggested. Besides this, the management is suggested to
have effective plan and follow up system for purchasing. Further the paper proposes that the order
processing system should be revised to meet current purchasing needs. Even though the findings
show wrong purchases resulted from lack of clear specifications, the paper didn’t propose on the
importance of having specifications.
2.7.4 Evaluation of Procurement Process the case of Addis Ababa Water and
Sewerage Authority (Yonas, 2014)
The last but not the least research paper prepared by Yonas Dubalepresented toAddis Ababa
University College of Business and Economics Department of Public Administration and
Development Management.
The findings of the study showed that the authority has no any procurement strategy and policy.
As a result, the researcher recommended that senior managers should protect the department staff
from the misperceptions of the procurement department and assist the department to avoid the
corruption process with little adverse effect. The department with the involvement of the senior
manager should revise the procurement process and evade the unnecessary stage and bureaucratic
steps to make the organization material flow effective. Moreover, the internal controlling system
should be revised to be more in effect.
2.8 Conceptual Framework
According to Bogdan and Biklen (2003) a conceptual framework is a basic structure that consists
of certain abstract blocks which represent the observational, the experimental and the
24
analytical/synthetically aspects of a process or system being conceived. The interconnection of
these blocks completes the framework for certain expected outcomes. A variable is a measurable
characteristic that assumes different values among subjects. Independent Variables are changes
that occur in an experiment that are directly caused by the experimenter. The independent
variables in this study are purchasing planning, purchasing procedures and purchasing
performance. Purchasing performance is a function of several variables is presented in dependent
variable. Both independent and dependent variable are depicted in figure 2.1 below:
Figure 2.1Conceptual Framework
Independent variables Dependent variable
Purchasing planning
Purchasing performance
Purchasing performance
PPperformance with five Rights of
Purchasing procedures
Source: this model is adapted and modified from Kiage, J. O. (2013)
25
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 The Research Approach
In order to capture the best of both qualitative and quantitative data, the research is constructed
based on mixed method research approach. The researcher also intended to examine detail
assessment of purchasing practices and its challenges in the corporation. The advantage of using
mixed methods is that it enables to triangulate and support the data and result collected by
questionnaire (Greener, 2008 and Saunders et.al, 2007).
The primary technique for collecting the primary quantitative data used a self-developed
questionnaire containing self assessment items measured on the 5-point Likert type of scale
strongly disagree, disagree, neutral, agree, strongly agree and qualitative data collected through
open-ended questions. For this study an interview was conducted from six deputy CEOs.The
qualitative approach in the study focused on detailing the results of the quantitative phase and
describing its challenges in depth.
3.2 Research Design
According to Kothari (2004), a research design is the plan and structure of investigating so
conceived as to obtain answers to research questions. A research design functions as the research
blueprint for measurement and analysis of data (Creswell, 2003). The design is used for analyzing
the major part of the research project such as the samples, measurement of variables, treatments or
controls, and methods of assignment work, all these elements try to address the key research
questions. Jackson (1994), through understanding educational research argues that all research is
partly descriptive in nature, insofar as the descriptive aspect defines and describes the researchers
who, what, when, where, why, and how, which are exactly some of the questions raised in the
study. It also intended to describe observations as it exists. In this aspect descriptive research
design has been used as it is suitable for the study. The descriptive research design also saving
both time and money.
26
3.3Target Population
The whole set of the universe from which a sample taken is called the population (Saunders et al,
2007). Target population refers to the larger population to which the researcher ultimately would
like to generalize the results of the study (Mugenda, 2003). The population of this research was
focused on Chief Executive Officer, Water Infrastructure Construction Sector, Transport
Infrastructure Construction Sector, Dam and Irrigation Net work development Management
Sector, Corporate Resource Management and Support Service Sector, Construction Equipment
and Machinery Management Sectorand Building technology Construction Sector as the unit of
investigation of this study focused on ECWC located in Addis Ababa. Those who have the right
and mandate to initiate purchase request and when the goods and services delivered becomes end
user.
3.4 Sample Size and Technique
Determining sample size is very complex as it depends on other factors such as margins for errors,
degree of certainty and statistical technique (Corbetta, 2003). A general rule, one can say that the
sample must be of an optimum size i.e., it should neither be excessively large nor too small
(Kothari, 2004). The data was collected from ECWC head office. Therefore, the researcher was
select 89 sample sizes that are the right and mandate in purchasing process.
According to Kothari (2004), emphasized that when the universe is a small one, it is no use
resorting to a sample survey. When all items are covered, no element of chance is left, and highest
accuracy is obtained. In order to select sample from target population the researcher preferred to
use stratified sampling technique due to its convenience to take sample from each heterogeneous
sectors, it ensures each sub group with in the population recives proper representation with in the
sample and also observe the relationship(s) between sectors. Thus, the researcher divided in to
seven strata and use stratified random sampling method so as to select the samples from total
population.Which includes allhigher,middle and first linelevel leaders in the corporation which
directly and indirectly influenced by the practice of purchasing. This is because the delivery of
goods and services play the major role in the accomplishment of their annual working plans and
determine their successes as well as failure.
27
3.5 Data Collection Method and Pilot Test
The overall aim of the study was the assessment of purchasing practice and its challenges in the
case of ECWC. The data collection instrument/tools for collecting the primary quantitative data
used a self-developed questionnaire containing self assessment items measured on the 5-point
Likert type of scale. This are strongly disagree, disagree, neutral, agree, strongly agree and
qualitative data collected through open-ended questions questionnaires were distributed to
respondents, including a contingency to compensate for invalid and uncollected questionnaires.
The questionnaires were administered using a drop and pick later method. For this study an
interview was conducted from deputy CEO.
A pilot test was conducted using questionnaires and administered to respondents from ECWC at
head office. The proposed questionnaires were clearly in view of enabling collection of desired
information.
3.6 Sources of Data
There are two types of data, namely primary and secondary data. Researcher might use either both
or one of the types of data depends on the research type and data collect by researcher (Saunders
et.al, 2007). For this research, researcher used both primary and secondary data:
3.6.1 Primary Data Sources
For this research purpose primary data was collected through standardize questionnaire and
interviwe. Primary data are originated by a researcher for the specific purpose of addressing the
problem at hand (Malhotra and Birks, 2006).
3.6.2 Secondary Data Sources
Secondary data are books, manuals, directives, proclamation, annual reports and other related
articles were used. This secondary data used as reference and guide the focus of clarify research
question.
28
3.7 Ethical Consideration
Each discipline should have its own ethical guidelines regarding the treatment of human research
participants (Vanderstoep and Johnston, 2009). Research ethics deal with how we treat those who
participate in our studies and how we handle the data after we collect them. The researcher kept
privacy (that left any personal questions), anonymity (protecting the identity of specific
individuals from being known) and confidentiality or keeps the information confidential (Saunders
et.al, 2007). Accordingly, the questionnaire will distribute to voluntary participants and will have a
clear introduction and instruction parts regarding the purpose of the research.
3.8 Data Analysis and Presentation
According to Kombo and Tromp (2011), data analysis procedure includes the process of
packaging the collected information putting in order and structuring its main components in a way
that the findings can be easily and effectively communicated. After the pilot test is done before
analysis, all the questionnaires were checked for reliability and verification. Editing, coding and
tabulation were carried out. Descriptive statistics was done, and the results presented in numbers
and percentages. Further findings were also presented in tables and figures or numbers.
29
CHAPTER FOUR
DATA ANALYSIS, PRESENTATION AND INTERPRETATION
4.1 Introduction
The main objective of this research was to assess purchasing practice and its challenges in the case
of ECWC.In this regard, this chapter presents the results and findings of the study as collected
from the sample population. The questionnaire was designed in line with the objectives of the
study. To assure quality of data gathered, likert type questions were included whereby respondents
indicated the level of agreement to which the variables were practiced in a five-point likert scale
and open-ended questionnaire. Coded responses were entered intoExcell for data analysis. The
data have been presented by tabulation, and some figures. The chapter covers respondents’general
information based on demographic information and findings based on how the research
questions/objectives shows the assessement ofpurchasing practice and its challenges in the case of
ECWCand the results are presented and interpreted.
4.2. Demographics Data
In this section, the researcher analyzed and discussed demographic information of the respondents
which are relevant to the study was summarized on the tables here below and the frequencies and
percentages are calculated and described.
4.2.1. Questioners Response Rate
The total respondents included in the sample were 89. All of the respondents are found in thehead
office of ECWCin Addis Ababa. A total of 89respondents were properly filled and returned the
questioner which represents about 100% rate of return.
Table 4.1 Response Rate
Response Rate Frequency Percentage
Responded 89 100
Not responded 0 0
Total 89 100
Source: survey result (2019)
30
4.2.2 Age of Respondents
The age of the respondents is summarized as follows.
Table 4.2 Age response Rate

Age Frequency Percentage
20-29 years 11 12
30-39 years 35 40
40-49 years 26 29
above 50 years 17 19
Total 89 100
Source: Survey Result (2019)
4.2.3 Educational Level of Respondents
The education level of the respondents is summarized in the table 4.3 here below.
Table 4.3 Educationnal status of respondent
Educational Level Frequency Percentage

BA/BSC 60 68
MA/MSC 29 32
Diploma 0 0
Certificate 0 0
Total 89 100
The level of education of the respondents shows that none of them diploma and certificate, 60 %
who were the majority are first degree holders and 32% were second degree holders. This shows
that the respondents are well educated and could understand and respond to the questionnaire.
31
4.2.4 Work experience of Respondents
Table 4.4Work experience of Respondents

Work experience Frequency Percentage
5 & less than 5 years 5 7
6-10 years 10 11
11-15 years 27 30
Over 15 years 47 52
Total 89 100
As it is shown in table 4.4 above, from the total valid respondents, 7 % (5 respondents) of them
have five and below five years of experience, 11% (10 respondents) have six toten years work
experience, 30% (27 respondents) have eleven to fifty yearsof work experience and the rest 52%
(47 respondents) of them have above fifty years of work experience. In general, it can be seen
that from the above figure the majority of the respondents has more than 5 years of working
experience.From this figure we can conclude that the information obtained from them is reliable or
dependable since they have good know-how and experience about the concept of purchasing
practice in the corporation.
4.2.5 Position of Respondents
The table 4.5. below categorizes the distribution and frequency of respondents according to their
position in the ECWC.
Table 4.5Postion of Respondent

Position Frequency Percentage
Deputy CEO 6 7
Main department head 6 7
Departement head 30 33
Team leader 47 53
Total 89 100
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As it is shown in table 4.5above, from the total valid respondents 7% (6 respondents) of them were
working in deputy CEO, 7% ( 6 respondent) Main department head , 33% ( 30) respondent
working in Departement headand 53% ( 47respondents) working in Team leaders.All of the
respondents which were 100% are in the managerial postion which have the authority to make
decisions respective of their work. This position enables them to easily understand the current
practice of the research topic more easily than others. This implies that their working position
associated with their experience and educational background made the respondents to easily
understand the problems in purchasing and related activities, give sufficient and correct
information that could contribute to the validity of this research.
4.2.6 Respondents on Sectors
Table 4.6 Respondents on Sectors

Sector Frequency Percentage
Under Chief Executive Officer 21 24
Water Infrastructure Construction Sector 10 11
Transport Infrastructure Construction Sector 12 13
Dam and Irrigation Net work development Management Sector 8 9
Corporate Resource Management and Support Service Sector 23 26
Construction Equipment and Machinery Management Sector 9 10
Building technology Construction Sector 6 7
Total 89 100
4.3 Purchasing Planning
Purchasing planning is the requirement or the demands of future needs to procure goods and
services. According to the purchasing directives of ECWC each sector of the corporation has
tosubmit their next year purchasing planning (demands of goods and services) to the purchasing
department of the corporation.This planning document of each sector has to reavel the type of
goods & services, the quantity, clear specification and delivery schedule. Purchasing plan should
be proactive, failure to request the required goods or services will bring to cost schedule over run
33
of the project. It is also a means for under-utilization of the budget. To ensure the compatibility of
the current performance with the directives the questioner forwarded to the sample respondents
those includes 5 issues. Based on the questioner the response of the respondent tabulated as
follows.
Table 4.7 Response summary on purchasing planning

No Questions Scale
Strongly Disagree Neutral Agree Strongl
disagree y agree
End users adequately
plan their budget for the Frequency 0 25 6 49 9
1 purchasing of goods or
services that are going
to be procured. Percentage 0 28 7 55 10
In ECWC Purchasing Frequency
plan prepared through 0 41 25 20 3
2 the involvement and
participating of all end Percentage
users 0 47 28 22 3
End users provide clear Frequency
3 specification for the 5 39 28 15 2
purchasing of goods and
services that are going Percentage
to be procured. 6 44 31 17 2
End users are raised Frequency
4 their purchasing need on 5 38 24 18 4
time and according to
Percentage
their plan
6 43 27 20 4
Purchasing department Frequency
delivers training based 10 35 8 27 9
5 on the problem Percentage
identified and 11 40 9 30 10
assessment of inquiries.
Table 4.7 shows the percentage and distribution of the respondents reply for purchasing planning
major tacles. It is taken in to account that numbers 1, 2, 3, 4 and 5 represent strongly disagree,
disagree, neutral, agree and strongly agree respectively. The subsequent analyses were conducted
based on table 4.7 above. None of the respondent replied that strongly disagree end users
34
adequately plan their budget for the purchasing of goods or services that are going to be procured,
22 % of the respondents replied disagree, 8 % the respondents replied neutral, 59% of the
respondents replied agree and 11 % the respondents replied strongly agree .This shows that more
than half of the respondents agreed that end users plan their budget for the purchasing of goods or
services going to be procured but not fully adequate or effecively.
None of the respondent replied that strongly disagree Purchasing plan prepared through the
involvement and participating of all end users , 45 % of the respondent replied that disagree , 32 %
of the respondent replied neutral , 19 % of the respondent replied agree and 4 % of the respondent
replied strongly agree. From this data, ECWC does not have the practice of purchasing planning
through the involvement and participating of end users. About 3% of the respondents replied that
strongly disagree end users provide clear specification for the purchasing of goods and services
that are going to be procured, 51% of the respondent replieddisgree,29% of the respondent replied
neutral , 16 % of the respondent replied agree and 1 % of the respondent replied strongly agree.
This shows that half of the respondent response indicate disagreeend users provide unclear
specification for the purchasing of goods and services that are going to be procured.Most of the
time the corporation to request the clarification from supplier those who participating in the
bid.This result impact on the lead time of the purchasing process to long and is not procured goods
or services as per the schudle.
About 14% of the respondent replied that strongly disagree end users are raised their purchasing
need on time and according to their plan,49% of the respondent replied disgree, 2% of the
respondent replied neutral , 23 % of the respondent replied agree and 11 % of the respondent
replied strongly agree . This indicates that almost more thanhalf of the respondents replied
between strongly disagree and disagree in ECWCend users are not raised their need on time.
Finally 10 % of the respondent replied that strongly disagree Purchasing department delivers
training based on the problem identified and assessment of inquiries, 57% of the respondent
replied disgree, none of the respondent replied neutral , 25 % of the respondent replied agree and
8 % of the respondent replied strongly agree. This shows that more than half of the respondent
replied disagree Purchasing department delivers training based on the problem identified and
assessment of inquiries. Training is a crucial activity for the organization to build up the skill
manpower actively to carry out the job. If training is not prepared based on the need and problem
35
identified it is not meet the mission or objective of the corporation.Inaddition to this for
consecutive two years the training is delivered with the same agenda, no need identification and
assessment of inquries.All this problem directly affect the overall opration of the corporation.
Agreeably Mamiro (2010) in his findings underscores these facts and concludes that one of the
major setbacks in public procurement is poor procurement planning and management of the
procurement process which include needs that are not well identified and estimated, unrealistic
budgets and inadequacy of skills of procurement staff responsible for procurement.
4.4 Purchasing Performance Evaluation

This part of the research tries to assess the performance of ECWCwith the most common
parameter of purchasing goods or service with right quality, at right time, at right price, from the
right place or source and with right quantity. Based on the purchasing directives of ECWC each
goods or services that has procured shall meet relevant quality that to satisfy agiven need, right
quantity based on the requsted amount, obtained the lowest possible purchase price that fit with
the specification, delivery of goods and services at the right time based on schedule of end users
and from the right source. To guarantee the current performance of purchasing activity five related
questioners are forwarded to the sample respondents. Based on the questioners are the responses
of the respondent tabulated as
Table 4.8 Performance of the ECWC in terms of purchasing with the 5R’s
S.No Items Very Poor Neiher good Good Very
Poor Nor Poor Good
1 With Right Quality Frequency 0 54 5 25 5
% 0 60 6 28 6
2 At Right Time Frequency 6 51 6 22 4
% 7 57 7 25 5
3 At Right Price Frequency 1 16 13 49 10
% 1 18 15 55 11
4 With Right Quantity Frequency 0 5 3 53 28
% 0 6 3 60 31
5 From the Right Source Frequency 0 9 10 40 30
% 0 10 11 45 34
36
According to the above Table 4.8 it shows that none of the respondent replied that very poor
performance in purchasing of right quality, 60% of the respondents reply poor, 6% of the
respondent reply neither good nor poor, 28% of the respondent reply good and 6% of respondent
reply very good.From the above data many of the respondent unhappyor poor performance with
the purchasing of quality of the goods or services by the corporation.Moreover, as per the
researcher observation, enormous amount of procured material are stored in the corporation
storeespecially those which are purchased by request for quotation metod of purchasing.The right
material and economic use of the resource is critical for the corporation to deliver its service to the
public. Because of more than 64% of the corporation budget is spent for the purpose of purchasing
goods and services. This implies that give a great attention to the quality of the material for
entended purpose.
For the procuring ofmaterials with the right time, 7 % of respondents reply very poor and neither
good nor poor performance, 57% of respondent repliedpoor, 25 % respondents reply good and 5%
respondents reply that very good. This data implies that almost more than half of the respondent
replied purchases the requested materials with the right time are poor. According to the
corporation, the main reason for the delay of purchasing is that most of suppliers engaged into a
contract of purchase with having minimum level or no stock of material. After the contractual
agreement, supplier they may need additional time to supply the material. This result cost over run
and delay of the project plan or progress. Thus, it is possible to understand that the time taken to
procure the material is too long. Since each setor achieve their goal with the supplied material, the
delay of supplying the material makes them not to achieve as per their own time plan.
The above table 4.8 also shows that 1% of the respondents replied very poor purchasing activity
carried out at right price, 18% of respondent replied poor , 15% of respondent replied Neiher good
nor poor , 55% of respondent replied good and 11% of respondent replied very good .This show
that the corporation has good progress in purchasing of goods or services at right price.More than
three fourth of the respondents reply indifferent betweengood and very good which is 91 %of
purchasing activity carried out with the right quantity,none of the respondent reply very poor and
6 % of the respondent reply poor the main department is not purchase with the right quantityof
goods and services requsted by end users.Generallyfrom the abovedata thecorporation has no
significant problem regarding the purchase of right quantity.
37
Finally none of the respondent replied that very poor performance in purchasing of goods or
services from the right source or place, 10 % replied poor, 11 % replied neither good nor poor, 45
% replied good and 34 % replied very good.The picemel procurement team leader also assume
that the procuring process tries to address every range of supplier and suggest that it is fair in
addressing the right source. Thus, it is possible to understand that the department has no
significant problem regarding procuring the right source. But it needs further investigation
regarding the purchasing of goods or services from the right source especially for purchasing of
goods or services by request for quotation method.
4.5 PurchasingProcedures
Purchasing encompasses the process of acquiring items and/or services. It begins when an
organization or end users has identified a need and decided on its purchasing requirement.
Procurement continues through the processes of risk assessment, seeking and evaluating
alternative solutions, contract award, delivery of payment for the property and/or services and,
where relevant the ongoing management of a contract and consideration of options related to the
contract (Waters 2004).
According to the corporation manuals the purchasing work flows or stages described as follows
Recognition of need, Accurate description of desired commodity, Preparation of standard bid
document (SBD) , Send draft bidding document to procurement committee for review and
approval ,Float the advertisement invitation to tender , Selling and opening of the bidding
document , Preparation and approval of preliminary evaluation , Assigning of technical evaluation
committee and carry out technical evaluation ( TAC) , Send the technical evaluation report to
procurement committee for review and approval , Notify the result of the technical evaluation to
the successful and unsuccessful ,Notify the result of the combined technical and financial
evalution to the successful and unsccessful or Preparation of the purchase order, Sinning of the
contract agreement , Delivery of goods/services or works , Receipt and inspection of goods,
Clearing the invoices and Payment and finally maintenance of records . To check the current
activity of the corporation on purchasing procdures 11 related qustioner forwarded to the sample
respondents. Based on the questioner the response of the respondents tabulated as follows.
38
Table 4.9Purchasing Procedures
Questions Strongly Disa Neut Agre Strongl
Disagree gree ral e y Agree
Tender evaluation conducted according Frequency 0 0 4 72 13
to predetermined set criteria in the bid Percent 0 0 4 81 15
document
Procured items are tested and inspected Frequency 0 3 31 48 7
accordingly at the time of delivery Percent 0 3 35 54 8
Contract management is conducted Frequency 0 34 28 21 6
according to the bidding and contract Percent 0 38 31 24 7
document terms and conditions
Non-compliance with procedures and Frequency 0 31 8 42 8
regulations or unethical behavior is a Percent 0 35 9 47 9
challenge for effective purchasing.
Endorsing committees give due Frequency 0 40 8 34 7
attention in carrying out their duty Percent 0 45 9 38 8
properly and where necessary take
corrective measures.
Tenders are awarded within the tender Frequency 0 55 9 18 7
validity period Percent 0 62 10 20 8
There is monitoring mechanism to Frequency 4 39 10 34 2
ensure that goods supplied, or service Percent 5 44 11 38 2
is rendered within the time to agree.
Professionalism or quality of Frequency 2 13 9 57 8
purchasing workforce is a challenge of Percent 2 15 10 64 9
purchasing practice
Proper follow up is maintained and Frequency 4 46 9 30 0
appropriate decision is taken in regard Percent 5 52 10 33 0
to securities and warranties
Purchasing and Finance Department Frequency 8 47 4 30 0
facilitates pament of the supplier by Percent 9 53 4 34 0
providing necessary documentation
based on lead time.
The procurement manual is the best Frequency 1 8 4 48 28
and flexible to purchase the goods, Percent 1 9 4 54 32
services and works on time or to carry
out effective purchasing activity
Source: Survey Result (2019
39
Table 4.9 shows that the percentage and distribution of the respondents reply for purchasing
procedures and performance. It is taken in to account that numbers 1, 2, 3, 4 and 5 represent for
strongly disagree, disagree, neutral, agree and strongly agree respectively. The subsequent
analyses were conducted based on table 4.9 above. About none of the respondents strongly
disagree that tender evaluation conducted according to predetermined set criteria in the bid
document, none of the respondents disagree, 4% of the respondents neutral, 81% of the
respondents agree and 15 % of the respondent strongly agree. This shows that more than half of
the respondents agreed that Tender evaluation conducted according to predetermined set criteria in
the bid document.
Also about none of the respondents strongly disagree that, procured items are tested and inspected
accordingly at the time of delivery, 3 % of the respondents disagree, 35 % of the respondents
neutral, 54% of the respondents agree and 8 % of the respondent strongly agree. This shows that
half of the respondents agreed that in ECWC procured items are tested and inspected accordingly
at the time of delivery. But not small number of respondent replied their response on neutral, this
shows that the corporation still do better in tested and inspected goods or services at the time of
delivery.About none of the respondents strongly disagree that contract management is conducted
according to the bidding and contract document terms and conditions, 38 % of the respondents
disagree, 31% of the respondents neutral, 24 % of the respondents agree and 7 % of the respondent
strongly agree. This shows majority of the respondents disagreed and neutral Contract
management is conducted according to the bidding and contract document terms and conditions.
Because of this most of the project does not accomplish as per contract agreement and also delay
of items to procured. This indicates that Contract management is not conducted according to the
bidding and contract document terms and conditions.
From the above data also about none of the respondents strongly disagree in ECWC biddersnon
compliance with procuders and regulations is a challenge for effective purchasing,35 % of the
respondents disagree, 9 % of the respondents neutral, 47 % of the respondents agree and 9 % of
the respondent strongly agree. This shows that less than half of the respondents agree that
noncompliance with procedure and regulation a challenge for effective purchasing. This indicates
that complaints are not handled and treated as per rule and regulation of the corporation by
procurement and property administration main departement. Also about none of the respondents
40
strongly disagree endorsing committees give due attention in carrying out their duty properly and
where necessary take corrective action, 45 % of respondent disagree, 9% neutral, 38% agree and
8% strongly agree.This shows that endorsing committees does not properly carry out their duties.
This leads to delay of purchasing process especially in national and forigen method of purchasing
to approve the bid document for purchasing of different goods or services through open bid.None
of the respondent replied thatstrongly disagree tenders are awarded within the tender validity
period, 62 % of the respondent replied disagree, 10 % of the respondent replied neutral, 20 % of
the respondent replied agree and 8 % of the respondent replied strongly agree. This shows that
most of the respondent to agree tender does not awarded within the tender validity period. The
problem is to expose the main department to cancllation of the bid, increased costs and
bureaucratic systems of purchasing process.
About 5 % of the respondent replied that strongly disagree there is monitoring mechanism to
ensure that goods supplied or service is rendered within the time to agree, 44 % of the respondent
replied disagree, 11% of the respondent replied neutral , 38 % of the respondent replied agree and
2% of the respondent replied strongly agree.This shows that most of the respondents disagreed
that main department does not have adequatelymonitoring mechanism to ensure goods supplied or
service is rendered within the time to agree , this short coming to intruupt the purchasing
procedure and performance. 2 % of the respondent replied that strongly disagree professionalism
or quality of purchasing work force is a challenge of purchasing practice, 15 % of the respondent
replied disagree, 10 % of the respondent replied neutral, 64 % of the respondent replied agree and
9 % of the respondent repliedstrongly agree.From this data we assume that more than half of the
respondent replied professionalism or quality of purchasing work force is a challenge of
purchasing practice for main department.This highly affects the overall activity of the corporation
because of the procurement and property adminstraion main department the back bone of the
corporation to supply the need of end users effectively.
Based on table 4.9 above 5 % of the respondent replied that strongly disagree proper follow up is
maintained and appropriate decisions is taken in regard to securities and warranties, 52 % of
respondent replied disagree, 10 % of respondent replied neutral,33% of respondent replied
agree and none of the respondent replied strongly disagree.From this response we analyze that
suppliers securities and warranties does not properly hand over and appropriate decision is given
41
according to the contract agreement. Additionally the foerign and national team leader assume that
the supplier’s securities and warranties can expire with out taking any action tivity.About 9 % of
respondent replied that strongly disagree Purchasing and Finance department facilitates payment
of the supplier’s by providing necessary documentation based on lead time, 53 % of the
respondent replied disagree, 4 % of the respondent replied neutral,34 % of the respondent replied
agree and none of the respondent replied strongly agree. This shows that more than half of the
respondent disagree that there is a problem between Purchasing and Finance department to
facilitate payment of the supplier’s by providing necessary documentation based on lead
time.Becuse of budget constraint and in proper handling of supplier’s document the pament does
not deliver according to the lead time and weak bondage between both main departments. From
the respondent based on the above data 1 % replied that strongly disagree the procurement manual
is the best and flexible to purchase the goods, services and works on time or to carry out effective
purchasing activity, 9 % of the respondent replied disagree, 4 % of the respondent replied neutral,
54 % of the respondent replied agree and 32 % of the respondent repliedstrongly agree.Finallythe
result shows that more than 50 % of the respondent the procurement manual is the best and
flexible to carry out the purchasing process effectively.
Finally, there are additional information mentioned under qualitative interview on purchasing of
planning, performance and procedures. This are; -
 Commitment of the staff,this is basically arises from the amalgamation of the corporation
from three different independent organization. The management of ECWC did not give
attention in changing the mind set of the employees during the amalgamation. This means
every employee of three independent organizationsis mentally unwilling to accept the rules
and regulation of the ECWC and seeking their previous organization.
 The working environmentand incentives of of their previous organization were better than
the current ECWC.
 The process is too long; This resulted in frequent bidding of the same goods or services
 The organizational location by itself contributes for the delay of purchasing process. The
corporation has 5 working areas in different parts of Addis Ababa. Head office is in gurd
shoal, Transport sector, supply and property adminstartion division foud at Mexico,
Construction and building sector is at kality and Transport sector maintenance located at
42
pissa.The location of these different sector leads to wastes end users working time. That is
to request the purchase of some item the end user let say from head office gurd shoal has to
move Mexico to authorize the purchase request. This is because the supply and property
administration department office is in Mexico, although ware house at kality.
 Lack of budget and shortage of foreign currency is critical problem to purchase different
types of capital goods or services. Since it is managed by Ethiopian government national
bank of Ethiopia and out side the control of the ECWC has signficantlly affected the
projectperformance.
 Delegation of authorities improves decisions making processes. The corporation is huge
public enterprise. Delegation of authority not only to deputy CEO but also to other officials
is a crucial factor to facilitate the process.Delegation reduces the amount of time in
working process, Increase the belongingness for the officials and improves the leader’s
boosts their responsibility and accountability.There is no delegating mechanism. This
problem by it self affects the purchasing process.
 Since it is the corruption suceptable area of activity, it can not be free from unethical
issues.
43
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 Introduction
This chapter summarizes detailed conclusions with the possible recommendation. Conclusions are
drawn based on the obtained results on the data presentation and analysis. Finally, the researcher
recommendations for future research that may be importance are put forward.
5.2 Summary
The purpose of this study was to assess the Purchasing practice and its challenges in the case of
ECWC. The activity of the corporation was evaluated through different sector and user department
satisfaction level, perception of the purchasingand property administration main department
performance. Most of the demographic characteristics of the respondents are capable of showing
the required data. Based on the quantitative and qualitative data analysis, discussion of results with
respect to the basic question, the following are the summary of major findings of the research;
5.2.1 Purchasing Planning
From the findings, majority of respondents indicated that purchasing plans in the main department
impacted directlyon purchasing performance. This study found out the goods/services or works
not being procured on time because the work programs affected by purchasing planning i.e.
incomplete purchasing plan and urgent/unplanned purchasing requisitions are influence the
purchasing performance of ECWC.
5.2.2 Purchasing Performance
Therefore, from the above result, we can summarize that the purchasing performance is very poor
in carried out with the right time and below average with the right quality and from the right
source of procuring goods or services, but it is better performance in at right time and with right
quantity . Goods or services are appropriate, and they are procured at the best possible cost to
meet the needs of the end users or to feet the entended purpose in terms of with right quality, with
rightquantity, at right time, at right price and from the right source.
44
5.2.3 Purchasing Procedures
From the findings, majority of respondents indicated that purchasing procedures have a great
impact on purchasing performance.The results have shown that contract management, non
compliance with procedures andregulations, tender is not awarded within the tender validity
period, lack of commitement endorsing committees in carrying out their duty has significant role
in purchasing procedures inECWC. The study found out also there was poor monitoring
mechanism to ensure goods supplied or service rendered with in the time to agree, in appropriate
handling and controlling of securities and warranties, inefficincey of facilitating payment of
supplier because of budget construent and weak handling of documentation both in finance and
procurement main department. Finally challenge of qualiy purchasing workforce can intrrupt the
purchasing procdures in the system. This is also confirmed by Thai (2001), Inflexible and
bureaucratic systems of procurement contribute to unacceptable contract delays, increased costs,
and potential for manipulation of contract public expenditure is slow, ineffective, expensive and
often corrupt.
In general purchasing planning, procdures and performance can effectively carry out for
accomplishment of the target of the corporation.
5.3 Conclusion
The main aim of the research was the assessment of purchasing practice and its challenges in the
case of ECWC. To achevive the objectives of the study, a survey of the available literature that
was undertaken is presented in Chapter two in detal. The chapter therefore provides the theoretical
grounding that forms the foundation of the research overall system. Based on the literature review,
the empirical data are presented in chapter three. Thus, the researcher tries to conclude the
following main points,
 Purchasing planning is one of the most important steps in the purchasing cycle. The
purchasing plan is expected to list all the requirements that are under the responsibility of the
main department and that are expected to be procured over a period of time.According to the
research result purchasing plan is not fully prepared and the plan is failed short to be presented
based on the standard and on appropriate time.
45
 The corporation performs well enough in the area of purchasing the right quantity, at right
price and from right source or supplier. However, poor performance in the area of procuring
with the right quality and atright time.
 The corporation procurement main department training is takes place spontaneously. There are
no need assessment inquiries before the training has carried out. It is not presented based on
understanding the knowledge gap. Most of the time, it is done to present the government
procurement policy, procurement method, and related issue.
 A precise specification of the physical characteristics, quality, or desired outcomes of a

commodity, works and service to be procured should be formulated as accurately and
precisely, which a supplier must be able to produce or deliver to be considered for award of a
contract .The study revealed that there is a problem in preparing clarified and complete
specifications.
 The purchasing workforce so important to the work of the corporation. The research resultclear
that there is lack of skilled manpower in the procurement and property administration main
department of the corporation because of low salary scale with compare to other related
organization and the current market salary scale.
 Effective managingcontracts can lead to significant cost savings and efficiency of the
purchasing process and reduce the risk of poor contract performance. This research showed
that there is weak contract management due to contract administration procedure which isnot
transparent.
 In general, the study concludes that ineffective purchasing planning;performance and
procdures can put great impact on the operation of the corporation.
5.4 Recommendation for the Corporation
Based on the above major finding of the following recommendation has been forwarded for
ECWC to improve its purchasing performance.
 There is poor planning process when they perform procuring of goods or services: the
ECWC shall prepare on time with complete information by end users. In addition, different
sectors, main departments and departments shall also minimized urgent/unplanned
46
requisitions. ECWC should strengthen and ensure successful implementation of their
organizational plan and to achieve their goals and objectives.Purchasing plan must be fully
integrated with the strategic plan and budget of the corporation.Purchasing plan is
specifically designed to assure that funds are available for the purchasing of goods, works
or services, whichare proper method of purchasing is undertaken.
 Purchasing procedures also a challenge in purchasing activities: Administrative procedures

evaluate the entire purchasing procedures in order to identify service delivery point of
breakdown with a view to re-engineer the purchasing process. The contract management
procedures should be improved to increase the performance level of purchasing process by
reducing delays in finance process and delivery of goods, works or services by improving
contract management procedures. The purchasing process should be administered by
qualified and experienced purchasing professionals.
 The corporation should enhance its employee’s competence as a way of achieving service
delivery as a means of improving purchasing performance. This can be achieved by
creating awareness through short and long term trainingswith collaboration of Human
resource development division by identifying the need, problem and skill gap of the
employee’sin entire purchasing process. For the success of the contracts under execution,
the management of corporation should ensure that proper mechanisms for purchasing
performance such as adequate monitoring and evaluation of purchasing performance are
put in place with the input of purchasing personnel and the user department with progress
reports that helps to take corrective action.
 Creating a purchasing workforce with the right skills and capabilities leads to sound
purchasing activities. The corporation needs to retain skilled personnel by revising their
salary scale, development of an effective monitoring and evaluation tool, and the creation
of incentive programs to motivate good performance.
 Delegation of authority can not clearly define in ECWC: The operating decisions in a
decentralized setting tend to be of higher quality. Decisions should be more appropriate,
timely and quickly because they are made nearest to the points of the problem, information
and actions. Decisions should also be democratic and acceptable as these are made by the
47
people who are responsible for implementing them. Soit is better to decentralize their
decision-making authority to reduce the burden and facilitate purchasing processes for
effective and efficient use of scarce resources.
48
REFERENCE
Alijan George.(1973), Purchasing Handbook.2nd edition. New York: Mc Grow Hill Inc.
Ethiopian Construction Works Corporation Procurement Manual updated on September 2017.
Leenders et.al.(1989), Purchasing and Materials Management. Richard D. Erwin, Inc., USA
Federal Democratic Republic of Ethiopia (FDRE), (2009), Ethiopian Federal Government
Procurement and Property Administration Proclamation No. 649/2009.
Ministry of Finance and economic Development (MoFED). 2011. Ethiopian Public Procurement
Manual , MoFED, Addis Ababa, Ethiopia.
Cooper, J., & Schindler, M. (2008), Perfect Sample Size in Research. New Jersey: Macmillan.
Creswell, W. (2003). Research Design: Qualitative, Quantitative and Mixed Methods Approaches,
(2nd Ed.), London: Sage Publications Inc.
Glass, G. V., & Hopkins, K. D. (1984),'Descriptive research in Qualitative and quantitative
Research' Journal of Education, communication and Technology, 3(1), 45 – 57.
Kothari, C. R. (2004), 'Research Methodology (2nd Edition)', New Delhi: New Age International
(P) Ltd.
Fearon,E and England,B (1992), Purchasing and Material Management, 9th edition, New Print
India Pvt. Ltd. New Delhi, India.
Federal Negarit Gazeta (2005), determining procedures of public procurement and establishing its
supervisory agency proclamation, Proclamation No. 400/2005 Addis Ababa Ethiopia.
Johnson and et al (2006), Purchasing and Supply Management with 50 supply chain cases, 13th
edition, McGraw Hill/Irwin, New York, USA
49
Lysons,K and Farrington.B (2006), Purchasing and Supply Chain Management, 7th edition, the
Chartered Institute of Purchasing & supply, Great Britain
Mesfen,T (2007), Evaluation of Purchasing Practice at Addis Ababa University college of
Commerce, Addis Ababa, Ethiopia.
Paulraj, A., Chen, I. J. & Flynn, J. (2006). 'Level of strategic purchasing: Impact on supply Chain
Integration and Performance'. Journal of purchasing and supply Management, 12(3), 107-122.
Shaw, F N. (2010), The power to procure: A look inside of the city of Austin procurement
program, MA Thesis in Public Administration, Department of Political Sciences.
Texas State University, USA.
Yonas Dubale,(2014). Evaluation of procurement process: the case of Addis Ababa Water and
Sewerage Authority, MA Thesis in Public Management and Policy, Addis Ababa,
Ethiopia.
Biruk, (2006), evaluating the purchasing procedure in Ethiopian Grain Trade Enterprise
Senioressay Addis Ababa University college of Commerce procurement and supplies
management department.
Mamiro, G. (2010). 'Value for money, the limping pillar in public procurement experience-from-
50
APPENDICES
Appendix -A
MASTERS OF BUSINES ADMINSTRATION IN GENERAL MANAGEMENT
Questioner prepared for respondents under the assessment of purchasing practice and its
challenges in the case of Ethiopian Construction Works Corporation /ECWC/.
Dear Respected Respondents
My name is Abera Urgesa and I am carrying out an academic research on assessment of purchasing
Practice and its challenges in the case of Ethiopian Construction Works Corporation /ECWC/. The
information you provide is used for research purpose only, and will be kept confidential at all level. I
appreciate taking your time to complete the survey and kindly request you to remember that the
quality of this work is completely dependent up on your frank opinions. Please consider each
statement carefully before you give it an evaluation. If you have any query, please do not hesitate to
contact me. I am available at your convenience through Tel. 0911-18-63-53/ 0909-92-17-
88.Instruction: -
Please put tick mark (√) on your choice(s).
No need to mention your name (anonymous)
Part I: Demographic data/ Respondent Profile/
Please indicate your gender: Male Female
Age of respondents (year): 20-29 30-39 40-49 50 and above
Level of education: Certificate Diploma BA/BSC MA/MSC
Job title..........................................................
Work Experience: Less than 5 6-10 years 11-15 years Over 15 years
Name of the sector your departmentbelongs to?......................................................
51
Part II: Purchasing planning
2. What is your level of agreement with the following statements that relate to the practice of
Purchasing planning of different sectors, main departments and departments on purchasing
performance in ECWC?
S. No Purchasing planning and related Strongly Disagree Neutral Agree Strongly

questions Disagree Agree
End users adequately plan their
budget for the purchasing of goods
2.1 or services that are going to be
procured.
In ECWC Purchasing plan prepared
2.2 through the involvement and
participating of all end users.
End users provide clear
2.3 specification for the purchasing of
goods and services that are going to
be procured.
End users are raised their
2.4 purchasing need on time and
according to their plan
2.5 Purchasing department delivers

training based on the problem
identified and assessment of
inquiries.
Is there any additional planning activity that has to be raised? Please mention your own
..............................................................................................................................................................
..............................................................................................................................................................
................................................................................
52
Part III: purchasing performance evaluation related questions
3. How do you evaluate the ECWC Purchasingperformance based on five rights (5 R's) of
Purchasing?
Neither Very
S. No Purchasing performance Rating with Very Poor good nor Good good
regard to 5 R's poor poor
3.1 With Right Quality
3.2 At Right Time
3.3 At Right Price
3.4 With Right Quantity
3.5 From the Right Source

Part Four: Purchasing procedures
4. To what extent do you agree purchasing procedures affects purchasing performance in ECWC?
S. Purchasing procedures related Strongly Disagree Neutral Agree Strongly

No questions Disagree Agree
Tender evaluation conducted
4.1 according to predetermined set
criteria in the bid document
Procured items are tested and
4.2 inspected accordingly at the time
of delivery
Contract management is
conducted according to the
4.3 bidding and contract document
terms and conditions
Non compliance with procedures
and regulations or unethical
4.4 behavior is a challenge for
effective purchasing.
53
Endorsing committees give due
attention in carrying out their
4.5 duty properly and where
necessary take corrective
measures.
Tenders are awarded within the

4.6 tender validity period
There is monitoring mechanism

to ensure that goods supplied or
service is rendered within the
4.7 time to agree.
Professionalism or quality of
4.8 purchasing workforce is a
challenge of purchasing practice
Proper follow up is maintained
4.9 and appropriate decision is taken
in regard to securities and
warranties
Purchasing and Finance
4.10 Department facilitates payment
of the supplier by providing
necessary documentation based
on lead time.
The procurement manual is the
4.11 best and flexible to purchase the
goods, services and works on
time or to carry out effective
purchasing activity.
Is there any additional purchasing procedure that has to be raised? Please mention your own
..............................................................................................................................................................
.............................................................................................................................................................
Thank you very much
54
Appendix -B

MASTERS OF BUSINES ADMINSTRATION IN GENERAL MANAGEMENT
Questioner prepared for respondents under the assessment of purchasing practice and its
challenges in the case of Ethiopian Construction Works Corporation /ECWC/.
Unstructured Interview guide for Deputy CEO Staff

1. Position _____________________
2. Qualification ___________________
3. Training you take related to the task (Purchasing/ Procurement) __________________
4. What are the major challenges in purchasing process?
5. From the problem at what extent the shortage of foreign currency influences purchasing plan in
the ECWC?
6. Does adequate monitoring and evaluation of purchasing performance carried out in ECWC?
7. Do you think decentralization of authorities through delegation improves decision processes
cycles in purchasing process?
How it facilitate?
How it delays?
8. Is there any delegating mechanism for lower level officers?
9. Do you think an Ethical issue affects Purchasing process in ECWC?

10. In your experience, what are the most effective methods that ensuringan appropriate
Purchasing method thatcan be verified in the terms of the 5 R's?
Thank you very much
55

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ST.

ASSESSMENT OF PURCHASING PRACTICE AND ITS

ATHESIS SUBMITTED TO ST. MARY’S UNIVERSITY SCHOOL OF

ASSESSMENT OF PURCHASING PRACTICE AND ITS

APPROVED BY BOARD OF EXAMINERES

Dean, Graduate studies Signature

External Examiner Signature

Internal Examiner Signature

Abera Urgesa Megarsa ___________________

ST. Mary’s University, Addis Ababa June 2019

ECWC- Ethiopian Construction Works Corporation.

Table 4.1 Response Rate ……………………………………………………………… 28

Figure2.1 Conceptual Framework …………………………………………………… 25

1.1 Background of the study

1.2 Statement of the Problems

1.3 Research Questions

1.4 Objectives of the Study

1.4.1 The General Objective

1.4.2 Specific Objectives

1.5 Significance of the Study

1.6 Scope of the study

1.7 Limitation of the study

1.8 Organization of the Study

1.9 Definition of Terms and Concepts

Right Price: - purchased item with reasonable costing

2.1 Theoretical Review

2.1.1. Definitions of Terms

2.1.2 Public Procurement

Public procurement is the process of the acquisition, usually by means of a contractual

2.1.3 Procurement Methods

2.1.3.1Open Tender/ Bidding

2.1.3.2Two Stage Biding

2.1.3.3Request for Quotation

2.1.3.4 Request for Proposal

2.1.3.6 Direct Procurement

2.2. Principles of Public Procurement

2.2.1 Acquisition Efficiency /Value for Money/

 Ensuring the goods, works or services acquired are suitable.

2.2.2 Integrity /Avoiding Corruption and Conflict of Interest/

 On the basis of bribes

2.2.4 Equal Opportunities and Treatment of Supplies

2.2.5 Fair Treatment of Supplies

2.3.1 Need Identification

2.3.2 Planning and Specification of Goods or Services Required

2.3.3 Sourcing, Awarding and Supplier Management

Steps in the Sourcing Process

The procurement department coordinates the following

2.3.4 Placing Orders and Contracting

2.3.6 Delivery and Return

2.3.8 Records of Procurement Documents

 A brief description of the procurement;

Unfortunately, the majority of governmental, private organization and international organizations

2.5 Record Keeping

2.6 Challenges in Public Procurement

Organizational structure: Organizational structure may be very simple or very complicated,

2.7 Empirical Literature

2. 7.1 Purchasing Practice Problems in Addis Modjo Edible Oil Factory

2.7.3 Purchasing Management in Commercial Printing Enterprise (Getachew,

2.8 Conceptual Framework

Figure 2.1Conceptual Framework

Independent variables Dependent variable

PPperformance with five Rights of

Source: this model is adapted and modified from Kiage, J. O. (2013)

3.1 The Research Approach